April 18, 2011 - Deutsche Bank (DB) in its weekly paper and packaging report said box shipments (actual and average week) were up 4.1% year/year vs. DB's estimates of +1.5% to 3.5%.

DB said combined mill and box plant inventories fell 166,000 tons to 2,309,000 tons (10-year average decline from February to March = 76,000 tons).

"In our view these numbers are incrementally positive for containerboard and box producers such as International Paper, Rock-Tenn, Smurfit-Stone, Temple-Inland, Packaging Corp., and KapStone," said Mark Wilde, senior analyst covering the paper and forest products sector for DB.

Operating Rates and Trade Flows Improve Month/Month

The overall containerboard rate for March was 94.1% (linerboard = 92.3% and medium = 98.8%). "This is an improvement from the February 2011 rate of 93.4% (revised down from 94.2%)," Wilde noted.

Total containerboard exports were up 28.3% year/year to 383,000 tons. “We have received reliable trade reports over the past few days of a recent uptick in export pricing. We have heard of export quotes rising as much as $20/ton in the past 1-2 weeks. This could be a short-term blip or it could be something more fundamental,” Wilde said

According to DB, the positive numbers may put price hike discussions back on the table and a late spring/early summer attempt is plausible. "The issue now is about margin preservation," DB said in its report.

"With energy, freight, fiber and chemical costs rising, margins will come under increasing pressure over the next few quarters," Wilde added.